After criticism of video games in the PRC, sports action is on the rise
After criticism of video gam...
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After criticism of video games in the PRC, sports action is on the rise

4 August 2021
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2 min.
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After criticism of video games in the PRC, sports action is on the rise

Sports stocks

Amid harsh criticism of the video game industry in China's state-run media the previous day, a "tidal wave" touched stocks of Chinese manufacturers of sportswear, trainers and other sports-related companies, Bloomberg wrote.

After China's State Council announced plans to renovate parks, gyms and stadiums to create a 5 trillion yuan ($774 billion) sports industry by 2025, shares of Hong Kong-based sportswear manufacturers Li Ning Co Ltd (HK:2331) and ANTA Sports Products Ltd (HK:2020) rose 12%, and 10% respectively, and that's not the limit of growth. For the year as a whole, Li Ning shares are up 76% and Anta up 49%, while the Hang Seng index lost 2.5%.

The Chinese authorities' plan to promote and develop sporting activities in the country and encourage young people to do so stands in stark contrast to Tuesday's attack in the state media on the "spiritual opium" computer games. Shares in Tencent Holdings Ltd (HK:0700) and other gaming-related companies fell sharply as a result.

Investments in sports accessories, clothing and footwear have become a kind of "safe haven" for investors as Beijing's tough measures on financial technology, real estate and overseas listings have swept the market along with the frenzy raised by nationalists over the issue of cotton growing in Xinjiang and the controversy over the return of the Olympic Games to the country.

Goldman Sachs (NYSE:GS) has also turned its attention to the new trend. One analyst pointed out that there are good opportunities for China's sports industry. Goldman continues to buy shares of Li Ning Co. and Anta Sports, saying both companies would benefit from the growth of the entire industry and the "trend towards Chinese chic".

Other shares that rose on Wednesday were those of retailer Topsports International Holding Ltd (HK:6110), up 23 per cent on the Hong Kong stock exchange. Shares in Lander Sports Development Co Ltd (SZ:000558), China Sports Industry Group Co Ltd (SS:600158) and Jiangsu Jinling Sports Equipment Co Ltd (SZ:300651) rose on mainland exchanges.

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